Final answer:
The correct answer is C) No, group insurance requires a common interest or relationship. Solely forming a group for insurance does not usually meet the eligibility criteria for group insurance, as the members must share an additional common bond or interest.
Step-by-step explanation:
The question “Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?” addresses the prerequisites for group insurance eligibility. The accurate answer to this question is C) No, group insurance requires a common interest or relationship. Group insurance typically requires that the group members share a common relationship or interest beyond just obtaining insurance. This helps to avoid issues such as adverse selection where only those expecting high risk seek insurance, thereby raising costs disproportionately. Employment-based insurance is a common example where coverage is offered to a group of employees through their employer. This model helps mix high-risk and low-risk individuals, reducing the concerns for insurance providers. Forcing individuals, particularly low-risk ones, to buy insurance even at a higher rate than fair for their risk can also address adverse selection. However, laws and regulations often impact if and how this is implemented. For a group formed solely to get insurance, recognition as a legal entity or number of members would not be sufficient on their own to obtain group insurance coverage without the common interest or relationship.